Andy refers to Jon Arnold’s detailed analysis of Vonage vs. Telio. The interesting point for me is that it turns our that VoIP can be a very profitable business - if you have the customers…
Lets look at the figures. Vonage spends $6.86 per line on direct costs and $29.79 on subsidy of the ATA. Their ARPU is $26.33. WOW - this is some business. Income of $315.96 a year, costs of $112.11 (including ATA subsidy) a year. Gross Profit = $203.85! All this is great if you have the customers or a cheap way of acquiring them. But if you are Vonage and you spend $1m a day (!!!) on advertising and have a 2.6% monthly churn - you are in a problem.
Now lets say you are a cable company, or some other organization and you already own the customers - then you have a real cash cow on your hands! Remember the more customers you have = more pure IP calls = lower OPEX costs!
I don’t know how many of you noticed, but since IDT bought out Net2phone they have reintroduced the Net2phone “Vonage” offering for only $19.99. When you look at the figures above you can understand why.
Now lets go one step further and add interesting applications and features - no one will be able to stop you. The big question is can Vonage turn the plane around in mid-flight?
3 responses so far ↓
1 Naik’s News » Are VoIP Service Providers Making a Comeback? // Nov 27, 2006 at 2:29 pm
[...] Jon Arnold, unlike many of us naysayers has become increasingly bullish on competitive voice service providers (CVSPs) such as Vonage and Telio, and predicts sunny skies for them. Since then several others have joined the conversation. Moshe Maeir of Flat Planet Phone Co. wrote to us and pointed to one of his posts, arguing that the numbers make CVSP a great business. [...]
2 IP Hosted PBX » Is VoIP a profitable business? // Nov 28, 2006 at 5:42 am
[...] I came across a Moshe Maeir post in the Flatplanetphone where the writer argues that VoIP is a great business if the service providers stop customers churns. In fact, Moshe has referred Jon Arnolds comparative analysis on Q3 results of Vonage and Telio. [...]
3 iPhoneSystems - VoIP News and info » Is VoIP a profitable business? // Dec 4, 2006 at 6:03 am
[...] I came across a Moshe Maeir post in the Flatplanetphone where the writer argues that VoIP is a great business if the service providers stop customers churns. In fact, Moshe has referred Jon Arnolds comparative analysis on Q3 results of Vonage and Telio. [...]
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